2023q1
Regional eXplorer (ReX) update – 1st Quarter of 2023
S&P Global is glad to announce the first quarter update for 2023 of Regional eXplorer (ReX) – the South African knowledge base of municipal-level insight. Each quarter, data from a vast number of sources are incorporated into the ReX database to provide users with the most up-to-date statistics.
In this newsletter:
1. Electricity Disruptions Lead to Lower GDP Growth Estimates in South Africa
2. South African Macroeconomic Outlook
Electricity Disruptions Lead to Lower GDP Growth Estimates in South Africa.
S&P Global Market Intelligence analysts have lowered the real GDP Growth estimate for South Africa from 1.1% to 0.6 for 2023. This is due to the ongoing electricity disruptions experienced in South Africa. Furthermore, experts predict that South African citizens will suffer a minimum of 200 days of load-shedding over the course of the year mainly in stage 3 and stage 4. However, a weaker global backdrop, combined with slower consumer spending had added to growth expectations. The impact of the electricity disruptions will be seen in the mining, manufacturing, and agricultural sectors with these sectors expected to show weak growth during 2023.
South Africa’s electricity deficit attracts interest from South African households and local businesses in the short term. Large energy users such as mines will continue to make use of the higher licensing threshold of 100 MW for self-generation of electricity. In the meantime, the South African government is working towards the removal of the licensing threshold for embedded power generation over the course of the next year.
South African Macroeconomic Outlook
South Africa’s long-term growth potential is constrained by structural impediments that are exacerbated by the impact of the COVID-19 pandemic. South Africa’s potential growth rate has dropped back to 1.5% by 2020. Contributors to a potential growth rate—namely labor, capital, and productivity—have shown lackluster performances. Labor force participation is constrained by a highly unionized labor market, which allows for limited labor market flexibility, while the education systems lack in efficiency increasingly pushes more uneducated entrants into the labor market. As a result, a huge demand-supply mismatch continues in the labor market despite a worrying unemployment rate of close to 30%.
Stemming the slide of South Africa’s economic regression. South Africa’s weak economic backdrop has deepened the country's equality with the general population dismayed by the riling parting. The ANC continues to prioritize economic transformation through stringent and complicated empowerment legislation. Additionally, the policy focus shifted towards narrowing the electricity deficit in the economy by giving precedence to state power provider Eskom’s operational bottlenecks. They have doubled the allocation of the next renewable procurement round to 5200 MW in 2022.
South Africa’s infrastructure bottlenecks go beyond electricity. Along with electricity, water, transport, and fuel supplies are under pressure. This is a consequence of poor maintenance of infrastructure, atypical climate patterns, and global supply chain disruptions. The continued water shortages affect the mining, agriculture, automobiles, and energy sectors that rely heavily on water. The closure of crude oil refineries has further increased the reliance on refined fuel imports.
South Africa remains one of the most developed economies in the sub-Saharan region. The tax collection system remains one of the best in the world. This can also be said for the country's highly developed and well-regulated financial systems like the Johannesburg Stock Exchange. Given the infrastructure bottlenecks, South Africa’s facilities are the most developed in the region. Furthermore, the judicial system remains solid and the skills pool is diverse through high-ranked tertiary institutions. By unlocking the country’s renewable energy potential could place the economy on a stronger growth trajectory in the long term.
Main data release incorporated in this update.
ReX has been updated with the latest data available from StatsSA, SARB, SARS and many more which allowed for us to update ReX data to now include 2022 data on a sub-national level for most modules in ReX, including:
· Demographics
· Development
· Household Infrastructure
· Labour
· Income & Expenditure
· Tourism
· International Trade
In this release there are a few variables that will not have 2022 data available yet:
The Education Ratios under the Geographic Module do not have 2022 values as the latest EMIS data has not been released in time for the release. Furthermore, the Fiscal data, specifically the mSCOA data will be updated with 2021-22 financial year in July of this year. It is important to note that the Pre-mSCOA will not be updated further that 2019-20 financial year. The Crime data has been updated with the 2022 Q4, with that being said, we have not updated the annual data for crime. This will occur once the 2023 Q1 crime data is released by SAPS.
The quarterly GDP data has been updated to now include the quarter 4. The Quarterly GDP for 2022 can now be downloaded for all regions within ReX.
Over the course of the 1st quarter, we have updated the interface of ReX to now match the branding of S&P Global.
Enjoy the update!
The S&P Global ReX team